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By Jordan W. Charness

Peter just bought his third Volvo station wagon, but when he tried to insure it, his automobile insurer turned him down. Not only that, the insurance representative told him that his insurance was being cancelled effective immediately.

This not only shocked Peter, but it put him into a real bind. Peter had always used his station wagons for work: as a handyman, he transported about $250 worth of tools in his car as well as a folding ladder which he needed on the job. He would usually do one or two jobs a day and he used the car to get to and from his appointments. Peter had always told his insurance company exactly what he was doing with his car and for the past 15 years had had no problems at all.

The insurance company’s point of view was that the car was a commercial vehicle being used for work and therefore was not something that they would insure. Peter countered that he was using the car for the exact same purpose that he had always used it for and that he had always disclosed to his insurance company how and when he was using his vehicle.

Peter told the insurance company that they had no right to cancel him on the spot and should give him at least 30 days notice before cancelling his policy. The insurance agent told him “nothing doing,” and that effective midnight that night, he would not be insured. That left Peter scrambling to find a new insurance company in just eight hours.

As it turns out, in most cases an insurance company must give you at least 30 days notice before cancelling a policy unless they can prove that you had lied in your application. In that case, your insurance policy would probably remain in force but they would not likely pay you if you had a claim to make.

Oddly enough Peter received a letter in the mail from his insurance company 14 days later telling him that he had 30 days from his initial phone call to find a new insurance carrier. Fortunately for Peter it had only taken him four hours to find another insurance company to take over his car insurance. The new company could not understand why the first insurance company had made an issue out of Peter’s taking his car to work even if he may have had one or two appointments in a day. To them this did not make it a commercial vehicle.

This whole story underscores the fact that no two vehicle insurance policies are identical. Since an insurance contract is a private contract, each insurance company is entitled to give the type of coverage it wants and to enter into the type of risk it feels comfortable insuring. Peter, like any other customer, is free to take or leave what is being offered by the insurance company. He is, however, certainly entitled to better treatment than he received on that shocking day.

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